SCG takes over Vietnam subsidiary
SET-listed Siam Cement Group (SCG), Thailand's largest cement maker and industrial conglomerate, has announced sole ownership of Long Son Petrochemicals Co (LSP) in Vietnam after acquiring all stakes held by its Vietnamese partner.
The company submitted a letter on Monday to the Stock Exchange of Thailand explaining that Vina SCG Chemicals Co (VSCG), its wholly-owned subsidiary in the chemicals business, has signed an agreement with Vietnam Oil and Gas Group (PetroVietnam) to acquire a 29% equity stake in LSP for 2.9 billion baht.
The transaction is expected to be completed by the end of next month.
Upon completion of the transaction, SCG's indirect stake in LSP will increase from 71% to 100%, with 82% held by VSCG and Thai Plastic and Chemicals Plc maintaining 18%.
The 40% equity portion of the total project cost for SCG in this US$5.4 billion project (173 billion baht) will then increase from 53.4 billion baht to 70 billion following the equity purchase, given the prevailing exchange rate.
Engineering, procurement and construction (EPC) activities for this project will begin in the third quarter of 2018, with commercial operations targeted for the first half of 2023.
Vietnam's government continues to support the project by maintaining all granted incentives to the LSP. This investment is considered an asset acquisition transaction. The size of this transaction is 0.51% of total assets stated in SCG consolidated financial statements as of March 31, 2018. When combined with transactions in the past six months prior to the date of this one, the total size is 1.88%.
The disclosure of this transaction is not required under the disclosure rule for the acquisition and disposition of assets. This transaction is not a connected transaction, according to SCG's letter.
Earlier, Chaovalit Ekabut, Siam Cement's vice-president for finance and investment and chief financial officer, said the LSP project will be delayed by 3-6 months from late last year because SCG and its Vietnamese partner have yet to conclude terms of finance for the project.